While the defense bar applauded legislation passed last week that will raise the threshold for joint and several liability in Minnesota, plaintiffs’ lawyers expressed shock and outrage at a bill they say will “gut” dram shop liability and leave some tort victims without adequate compensation for their injuries.
Under current law, a defendant who is found to be 15 percent at fault or greater can be held jointly and severally liable for a plaintiff’s entire tort damages. Under the recently passed bill, a defendant cannot be held responsible for a plaintiff’s full tort damages unless the defendant is more than 50 percent at fault.
Joint and several liability reform is highly controversial in legal circles. A number of proposals to change the system have been introduced in the Legislature in recent years, but until now the plaintiffs’ bar has always been successful in staving off such measures. While Gov. Tim Pawlenty had not yet signed the bill at press time, legislative observers expect that it will receive the governor’s approval. (In prior interviews — including one with Minnesota Lawyer — Pawlenty has said that he is in favor of reforming the state’s joint and several liability system.)
If, as expected, it becomes law, practitioners predicted that it will have its greatest impact in dram shop cases, construction cases and other types of litigation where a plaintiff is injured by the acts of multiple tortfeasors and at least one of the tortfeasors lacks the ability to pay a judgment. The effect in dram shop cases is likely to be particularly dramatic because the intoxicated person who causes the accident typically has both the greatest degree of fault and the least ability to pay a judgment. Plaintiffs frequently must look to the bar or restaurant that served the inttoxicated person to make up for the damages that the intoxicated person cannot pay them. Under the reform bill, the establishment that served the liquor would only be liable for the full damages if it were found to be 51 percent at fault; in order to make this finding, the jury would have to conclude that the intoxicated person who directly injured the plaintiff was only 49 percent at fault or less.
Defense lawyers, insurers and business leaders have long argued that it is fair and reasonable that a defendant should only be required to pay its share of tort damages. The defense bar said the legislative action last week was the culmination of a long struggle.
“I have been involved with the [Minnesota Defense Lawyers Association (MDLA)] since 1982, and ever since I can remember, joint and several liability has been an issue,” observed Arden Hills defense lawyer Richard J. Thomas. “We have been trying to get a 50 percent rule for at least five years.”
Thomas credits the passage of the bill in the current session to three factors:
• the change in the makeup of the Legislature with the election of more conservative members who are sensitive to the concerns of business;
• the learning curve for educational efforts undertaken by defense lawyers and other change proponents; and
• the dedication and hard work of members of the MDLA and others who lobbied for change.
Plaintiffs lawyers last week were frustrated and upset by the eleventh hour adoption of a measure that will leave some very injured clients less than fully compensated.
The bill “is a devastating blow to innocent consumers,” said Minneapolis plaintiffs’ attorney James R. Schwebel. “This Legislature has responded to the unremitting pressure of the Chamber of Commerce and the highly organized insurance lobby. ... It emasculates the rights of injured people.”
Plaintiffs’ attorney Chris A. Messerly of Minneapolis, who has volunteered his time over the last five years to fight joint and several liability reform proposals on behalf of the Minnesota Trial Lawyers Association (MTLA), dubbed the bill “a victory for those who harm others by their negligence, such as bars, and their insurers.” He added that the legislation represents a clear loss “to those who might be the victims of their misconduct.”
The debate over joint and several liability has been going on long enough where most members of the bar are familiar with the arguments of both sides.
On the one hand are defense lawyers, business leaders and insurers who maintain that Minnesota’s current joint and several liability law is too liberal and is bad for business. Companies are frequently the “deep pockets” who get stuck with the bill when a more at-fault tortfeasor — be it a drunk patron, negligent subcontractor or other responsible party — has inadequate insurance and is unable to fully compensate an injured plaintiff. The company’s fault may be as little as 15 percent under current law for it to incur the obligation to fully compensate the plaintiff. Companies have also argued that Minnesota’s joint and several liability law leads to higher insurance premiums and makes the state a less competitive place to do business.
Plaintiffs’ lawyers, on the other hand, believe that where their client has been hurt by multiple tortfeasors, it is not unreasonable to place the burden on the tortfeasors to make sure the client is fully compensated. Where one defendant cannot pay its share of the damages, the other defendant or defendant should have to cover its share — not the innocent injured party. The client would not have been injured but for the actions of the defendants and should not be left less than fully compensated while there is at least one wrongdoer who can pay the bill.
“Shouldn’t someone who is at fault in causing someone else’s injury have to pay that person for those injuries before you ask the innocent victim to do it?” asked Schwebel.
Messerly observed that changing the joint and several liability law may wind up costing taxpayers millions of dollars a year. As an example, he recalled a case that he handled involving a brain-injured plaintiff. The plaintiff was able to recover from a joint tortfeasor and was able to reimburse the state for the plaintiff’s massive medical bills.
Schwebel observed that there are more and more cases where seriously injured plaintiffs are not fully compensated. While health-care costs have risen astronomically in recent years, most individuals have not kept pace in the amount of liability limits they carry on their insurance. The Legislature’s recent action creates a whole new class of inadequately compensated plaintiffs, he said.
Schwebel also noted that the situation in which the measure will make a difference will be in cases where there is a tortfeasor who cannot fully compensate the plaintiff. A defendant that pays more than its share under the joint and several law has always had the right to seek reimbursement from other at-fault tortfeasors and does so when the other tortfeasors have the financial resources to pay their share.
Both plaintiffs’ lawyers and defense lawyers acknowledged that it is difficult to gauge how many cases are likely to be affected by joint and several liability reform. “Nobody has done any empirical studies,” Thomas observed.
Practitioners did predict that there are certain areas of law where the effects are likely to be disproportionately large. For example, all of the attorneys who spoke with
Minnesota Lawyer agreed that plaintiffs in dram shop cases are likely to be impacted the most.
Waite Park attorney Michael A. Bryant, who is chair of the MTLA’s Legislative Committee, said the bill will “completely gut” the area of dram shop liability.
Bryant observed that drunk drivers are often high-risk drivers who are able to afford only minimal amounts of insurance. Bars and other liquor establishments that are a significant contributing cause of a plaintiffs’ injuries will no longer be required to make up for the damages that the drunk driver cannot pay, he added.
Minneapolis attorney Thomas E. Marshall, who is co-chair of the MDLA’s Law Improvement Committee, also said the cases most affected will be those where there are typically multiple defendants, such as dram shop cases and construction cases.
Construction cases frequently involve claims against a general contractor, a leasing company, a property owner and multiple subcontractors, each of which might bear a portion of the fault. However, the effect on plaintiffs in construction cases is likely to be not as great as in dram shop cases because of bonding requirements and the greater likelihood of recovery from those involved in the construction industry as opposed to those involved in liquor-liability cases. In high-damage cases where the plaintiffs’ injuries exceed a defendant’s ability to pay, the change in law could make a difference.
Practitioners have differing views on whether joint and several liability reform will promote, hinder or have no effect on current settlement practices.
Some believe that settlements will be more frequent and faster because plaintiffs will be more willing to settle for a defendant’s “fair share” without the potential for full recovery from a defendant who is less than 50 percent at fault. Others believe that defendants will be more apt to roll the dice at trial because they know they are unlikely to be held responsible for the full amount of the plaintiffs’ damages.
Thomas predicted the situation will remain the same. Defendants who are responsible will be willing to settle rather than go to trial. The only difference will be that the settlements will more closely reflect the amount of the defendant’s fair share, he said.
Marshall said the change promotes the resolution of cases by treating defendants fairly. He believes that the bill will ease some of the court system’s burden.
But plaintiffs’ lawyers speculated that the reform bill will make cases longer and tie up more of the already taxed judicial resources by encouraging defendants to bring in as many codefendants as possible in order to try to have jurors to attribute to them less than 51 percent of the blame.
Plaintiffs’ lawyers also expressed disappointment about the legislative process that led to the passage of the reform bill.
The joint and several reform proposal was tacked onto a real estate bill and was passed as a part of that bill. A provision providing for aggregation of fault — a proposal popular with the plaintiffs’ bar but not with the defense bar — was dropped out of the bill in the final week before its passage.
Aggregation comes into play when a plaintiff is partially at fault for his or her own injuries. Under current law, a plaintiff can only recover from a defendant if the plaintiff is less at fault than the defendant. So if a plaintiff is 40 percent at fault for his own injuries and two defendants are each 30 percent at fault, the plaintiff cannot recover from either defendant even though the defendants’ combined fault is greater than the plaintiff’s. Aggregation would allow the plaintiff to stack the fault of all the defendants in determining whether he or she could recover despite his or her own negligence. In the example cited, the plaintiff could recover because the plaintiff’s fault is 40 percent and the two defendants’ combined fault is 60 percent — 20 percent greater than the plaintiff’s own fault.
The version of the bill that passed maintains the current practice of not allowing the aggregation of fault.
Summing up the legislative process that lead to the passage of the bill, Messerly cited the old adage that laws are like sausages — those who love them should never see how they are made.
It is also worthy of note that the final version of the bill contained special provisions pertaining to intentional torts, environmental claims and municipalities. (See accompanying sidebar for full text of bill.)
Messerly said that a constitutional challenge to the bill may be in the offing because the bill denies a full remedy to citizens of the state.
Thomas said he was confident that any challenge to the legislation would fail.